Monday, March 12, 2012

Got Questions? Get Answers...MRA Wants A Strategic Default Plan

Got Questions?

Hi. My husband and I are thinking about walking away from our home. We live in Illinois and purchased our home in 2005 for $157,000. In December of 2006 we got a 2nd mortgage HELOC of $18,000. Maxed that on credit card debt and medical bills. In January of 2010 I lost 10% of my pay because of the recession and my husband would work over time all year up until then too. So we lost all that money as well. We were very dependent of his OT. We fell behind on our 1st mortgage. The most was 3 months behind. Finally in November 2010 we got approved and accepted a loan modification on our 1st mortgage with BOA and our principal balance was lowered to $145,000 and the payments we were behind were forgiven. I never notified my 2nd bank HELOC or ever fell behind on payments with the 2nd loan. I am only paying the minimum interest payments. My 2nd loan is with my Credit Union that I have banked with for 20+ years (dont know if that matters). Oh and the loan they gave me as the HELOC, would need to be paid back by end of 10 years. Well that isn’t going to happen. So now I have fallen 1 month behind on my 1st mortgage with BOA. Still paying my 2nd on time. Have looked on to see that my home is currently worth on their website $91,700. It needs a ton of work not to mention. Needs a new kitchen as I think its the original kitchen from when the house was built in 1960. The bathroom is full of mold and the basement is 1/2 finished. And also, my husband and I have maxed out our credit cards AGAIN which is about $10,000 total. I need a new car as the one I have has 198k miles and my husband and I just purchased a used one last year that we still owe $5k on. We are thinking of just buying a new car for me and then just walking away. We don’t think it’s worth paying for something that is worth almost 1/2 of what we owe on it and not to mention the additional money it needs to fix it up. I'd like to actually pay off my credit cards when I walk away, but don’t know if just filing for bankruptcy for everything EXCEPT the cars would be best.

Can you help me? I so look forward to your advice.


Get Answers…

Friday, March 9, 2012

Think about the Endgame

There is a recent article in the Washington Post entitled A million-dollar mortgage goes unpaid for years while couple fights foreclosure. It is the story of a Maryland couple whom had not made a mortgage payment in over 5 years.
  • “The eviction from their million-dollar home could come at any moment. Keith and Janet Ritter have been bracing for it — and battling against it — almost from the moment they moved into the five-bedroom, 4,900-square-foot manse along the Potomac River in Fort Washington. In five years, they have never made a mortgage payment, a fact that amazes even the most seasoned veterans of the foreclosure crisis.  The Ritters have kept the sheriff at bay by repeatedly filing for bankruptcy and by exploiting changes in Maryland’s laws designed to help delinquent homeowners avoid foreclosure.”
From the news article we learn that the Ritters purchased their house for $1.29 million. The purchase involved a mortgage loan of $1 million. The monthly mortgage loan payment, at the time, was $7600 a month. So if the the Ritters did not make a $7600 monthly payment for 5 years, they essentially "earned" or saved or spent $456,000 ($7600 per month x 12 months x 5 years). The Ritter’s story raises several important issues for all people who are actively strategically defaulting. First. What do you do with the money saved from not paying a mortgage? Second. How do you keep the proper mindset/focus during a strategic default? Third. What your ultimate objective of a strategic default? Let’s look at the Ritter’s situation to see if we can “glean” their mindset and determine what they did with the $456,000 in additional savings and/or income.
  • “During the boom, they set out to become mini real estate moguls, buying properties and flipping them for a profit. In the process, Keith Ritter, 54, [became] a successful real estate investor and landlord with a six-figure income. Then, when the housing market tanked five years ago, the couple found themselves facing multiple foreclosures. The Ritters have tried to negotiate different payment arrangements with their lender to save their posh home near National Harbor, they said, but to no avail. 'It was never our intention to get here and never make a mortgage payment,' Keith Ritter said. 'We don’t believe in living for free.' But he and Janet, a 51-year-old real estate agent, make no apology for using every tactic available to them to stay in their house, including challenging the foreclosure sale in court, requesting mediation and claiming they had a tenant living with them…“When a bank does all it can to save itself, that’s good business,” Keith said. “When a homeowner does the same thing, he’s called a deadbeat.”

Sunday, March 4, 2012

Debt Defense 101: The Must Know Rules Of Debt Defense

The basic rules of Deficiency Debt Defense 101 are an ever growing list of MUST DO and MUST IMPLEMENT RIGHT NOW basic strategies in order to achieve the goal of deficiency debt defense.

Deficiency debt also known as debt deficiency arises when collateral that is used to secure a loan cannot satisfy the total amount due on the loan. It happens most often with debt involving real estate. However, it can occur in other types of collateralized loans such as car, business, and equipment loans. When a loan goes unpaid, the lender has the right to auction off the property to pay off the debt. If the lender collects less than what is owed at the sale, the shortage is called debt deficiency. A lender can turn a debt deficiency into a deficiency judgment. Please read What Everyone Should Know About Debt Forgiveness, Obligations and Deficiencies to learn more about debt deficiency and the consequences of a deficiency judgment.

The primary goals of deficiency debt defenses are to:

1. Reduce the Risk and Amount of Deficiency Debt.
2. Strengthen Your Defenses Against Deficiency Debt.
3. Lengthen The Time To Pay Back The Deficiency Debt.

A proper defense requires that you plan and prepare now. So make sure to implement all of these rules. Make sure you come back and read these rules every month. We will be adding new rules along the way. Also, each rule will be further detailed and expanded in future blog posts. We will do our best to apply each rule to a real life scenario.

In the meantime start reading and start preparing.

1. Do not ignore any legal papers. Always prepare a defense to every legal action. Always respond to a legal action in writing. It LENGTHENS the time and STRENGTHENS your defense 100% of the time.

2. Try to save every debt collection message with a live voice on your answering machine. Save messages that appear to be aggressive, intimidating, or threatening.  It may be useful if you need to prove a creditors improper tactics. Make sure you keep track of calls about your debts to other people or businesses.  There are creditors who may contact family, friends, or business associates. This must be stopped. You can use a cease and desist letter to try and put a stop to phone call communications.